Coffee exports soar in 2010/11 but will decline in 2011/12

Recent figures from the National Bank of Ethiopia (the central bank) show that coffee exports surged by 59% in 2010/11 (July-June) to US$842m, a record sum. This reflects a robust 14% rise in volume sales to 196,200 tonnes and a 37% surge in world prices to an average of US$4.25/kg, from US$3.1/kg in the previous year. The increase helped to push total exports upwards by 37% to US$2.75bn in 2010/11, while coffee's share of the total climbed to 30.6%, from 26.4% in 2009/10. Gold exports were also buoyant, underpinned, like coffee, by higher production and world prices. Gold revenues climbed by 64% to US$462m to become the country's second most important earner for the first time. Oilseeds (principally sesame) slipped to third place after receipts dipped by 9% to US$327m. Other key exports were khat (up by 14%), flowers (up by 3%), leather and products (up by 84%), and pulses (up by 6%).

Coffee exports posted further growth in the third quarter of 2011, rising by 9% year on year to US$202m, despite a decline in volume sales, as prices continued moving higher to US$5.6/kg. However, coffee prospects subsequently dimmed owing to a retreat in world prices, which gathered momentum in 2012, and lower production following erratic rains in the main growing areas. A new government directive last November requiring exporters to ship in containers rather than traditional 60-kg bags also proved damaging, leading to complaints from key importers (and diplomatic pressure from some European governments), while highlighting the sometimes unpredictable policy environment. The directive was withdrawn a month later but caused a temporary dip in sales. Expectations of an approximate 15% decline in coffee production, coupled with a retreat in world prices, will lead to slippage in coffee receipts in 2011/12, although the magnitude of the fall remains uncertain. Increased earnings from gold, oilseeds, flowers and electricity will help to compensate.